Recent SEC Settlement Demonstrates FCPA Risks from Charitable Contributions

For just the second time in the Foreign Corrupt Practices Act’s (FCPA) history, a company was charged with FCPA offenses based solely on a charitable contribution that was intended to buy the influence of a foreign official.

On September 20, 2016, Utah-based Nu Skin Enterprises, Inc. paid almost $766,000 to settle SEC charges that it violated the internal controls and books-and-records provisions of the FCPA when Nu Skin’s China subsidiary (the “Subsidiary”) made a $154,000 payment to a charity. The SEC alleged that the charitable donation was to improperly influence a high-ranking Chinese Communist party official to prevent a provincial agency investigation of the Subsidiary.

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